Series 79 practice questionmediumFinancial Modeling
If a merger model does not balance after projected retained earnings are rolled forward, what should a banker check first?
- AWhether the logo was updated on the cover page
- BWhether the peer group has enough companies
- CWhether the model uses EBITDA instead of EBIT
- DWhether the cash flow statement and balance sheet linking formulas are consistent✓ Correct answer
Explanation
Why D — Whether the cash flow statement and balance sheet linking formulas are consistent
Whether the cash flow statement and balance sheet linking formulas are consistent Balance sheet issues usually come from broken links among net income, cash flow, working capital, debt, and equity balances. Experienced bankers fix model integrity before interpreting outputs such as accretion, leverage, or synergies.
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